The Investor Who Took On Uber, And Silicon Valley

Freada Kapor Klein stands on a staircase at the Kapor Center for Social Impact in Oakland, Calif. She is a high profile investor, who invested early on with Uber. She has used her voice and her money in a decades-long effort to promote more diversity in Silicon Valley.

Kapor Klein talks with communications manager Ashleigh Richelle (left) and the summer associates at the Kapor Center for Social Impact. Kapor Klein's life work is to change the culture of Silicon Valley.

Kapor Klein sits with her rescue dog, Dudley. He acts as the office's therapy dog and follows her throughout the day.

Talia Herman for NPR

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Originally published on June 16, 2017 11:40 am

Uber is a mess — the "bad boy" ethos shattered, a nervous breakdown in its place. This week, the CEO announced he is taking a sudden leave of absence. A former U.S. attorney general released a brutal audit of the startup's culture. It's a terrifying moment for many investors who want that $70 billion unicorn to make them rich or richer — not implode.

But there is one Uber investor who stands out for how she decided to speak up. It was not very Silicon Valley-like of her, but Freada Kapor Klein wanted to turn the crisis into a teachable moment. And while this week's events could lead her to say "I told you so," she has a different takeaway.

Let's rewind a few months. Kapor Klein decided to write an open letter to Uber — which she published with her husband — after a young woman shared an explosive account of sexual harassment at Uber headquarters.

Kapor Klein is a venture capitalist, or a VC. That means she makes money by betting on technology startups. Uber is one of those startups. She has committed to "impact investment" — businesses that can turn a profit while also making the world a better place. For too many years, she says, critics would question her on Uber, and she stayed silent. She tried to influence the company from the inside, though she didn't see a real will among leadership to change. While "Silicon Valley prides itself on pattern recognition," the letter said, Uber had "toxic patterns" that needed to stop.

Kapor Klein thought she was just saying what insiders knew: This is not a one-off. Turns out, her peers didn't like that and wanted her to pay for it.

"I could imagine that they wouldn't love the Uber letter," Kapor Klein says in an interview with NPR in mid-March. "But then that they would decide the next step they ought to go, is go after our high growth, hot startups and try to get them away from us!"

She's just learned that other VCs are trying to poach one of her hottest investments, and they're citing the Uber letter to do it, basically saying: this investor throws her own people under the bus.

"I mean, it's one thing to go pitch them. It's another to say, 'Get away from Kapor. See, they're going to do this to you,' " she says.

It may be counterintuitive, but in Silicon Valley, the land that created tweeting, there is a code of silence among the rich. People are here to make money, not to agitate. She violated that code.

But she won't back down. She tells me I should call a shortlist of her most powerful peers and demand they respond on the record. "Go to Sequoia, go to Benchmark, go to Kleiner, go to Accel, go to Andreessen, go to Khosla," she names the kings of much-storied Sand Hill Road in Menlo Park, Calif.

She's sitting inside the Kapor Center for Social Impact — a name that spells out the intent of the place. Kapor Klein and her husband bought this four-story building in central Oakland — what's become the edge of Silicon Valley as tech expands beyond Cupertino, Mountain View and San Francisco — and it houses an investment arm, research and philanthropic projects.

Kapor Klein is 64 years old, petite with jet black eyes and curly hair to match. She is tense as she recounts the blowback, her folded hands resting on a conference table made of reclaimed wood. Meanwhile her dog is napping by her feet, sprawled on a gray carpet made of recycled fishing nets. (She designed the building to be green.)

Dudley's snoring breaks her concentration, and she lets out a laugh. He's a rescue dog, but sometimes she claims he's a therapy dog. "You can see why. Doesn't he make you feel better?"

She wakes him up and the two go in search of her husband and business partner, Mitch Kapor. When they find him, he happens to be meeting with the president of Silicon Valley Bank — who is trying to not get in the middle of the couple's conversation. But Kapor Klein reels him in, telling him about the letter and the response. Greg Becker politely offers his take: "Yeah, people compete ... anyway they can, right? That's — unfortunately it's human nature ... ."

Kapor Klein points to her dog, who is now rubbing his enormous cream coat against the banker's leg, and she teases: "I thought it was just dogs that did that. Dogs, not humans." Her husband ends the conversation by saying: "It's a dog-eat-dog world."

This is his way of acting as her buffer — she, the one who pushes; he, the one who moderates.

Mitch Kapor is a bit of a legend, by the way. In the 1980s he founded Lotus, the famous spreadsheet maker. Some compare him to Steve Jobs and Bill Gates.

He pulled Kapor Klein into the tech world when he hired her to fix Lotus' culture in 1984, to make it the most progressive employer in the U.S. Quite the job description. She would lecture her boss about how he carries himself at work, how he should be "more sensitive" about his power, how he could make or break an employee's day just with eye contact.

The couple didn't get together until years later, when she sought him out for career advice; and his second marriage fell apart. He asked her out on a date. He had a son and a daughter. She was 43 and didn't have kids. She assumed it was a summer fling and warned him, date two, that she's not "stepmom material."

Turns out, it wasn't a fling.

Her life's work is to change the culture of Silicon Valley — a place she feels has gone backward in time. There are far fewer women in computer science today than in the 1980s. Blacks and Latinos are missing too. Kapor Klein faults the investor class, which holds on to the myth of meritocracy, that they are the hyper-rational conduits of capital and it so just happens that white men are the most worthy.

She shares a hokey saying she's heard one too many times: "We don't care if you're orange or blue; the only color we care about is green."

If all Kapor Klein did was critique, she'd be irrelevant here. This place values people who build things. And that is what she is doing. The building feels like an alternate universe — one where tech somehow looks like the rest of America.

On one floor, there's the investment team. Their portfolio includes Genius Plaza — the hot startup that others now want to poach. It's an online education platform founded by Ana Roca Castro, a woman from the Dominican Republic (which is exotic in these parts). She's landed major contracts with national agencies throughout Latin America, and is working to get into more U.S. schools.

Castro, who is based in Albany, N.Y., describes Kapor Klein as "protective," an early investor who tries to shoo away others who don't share their values. Asked if that could mean possessive, the tech founder disagrees. "When someone is territorial they want nobody around," but in multiple instances, Kapor Klein has opened doors she didn't know to knock. "She'll be the first to push me, saying, 'Don't be afraid.' "

Kapor Klein keeps an eclectic inner circle. It includes a former head of the NAACP; the woman who filed (and lost) a high-profile sexual harassment lawsuit against a leading venture capital fund; and Ulili Onovakpuri. The 32-year-old advises the health care portfolio, deciding which startups get money. But their relationship started when she was a teenager. Her now long-time mentor gave her a scholarship to UC Berkeley. (Kapor Klein launched the IDEAL Scholars Fund, for high-achieving minority students, after California ended affirmative action in schools.)

Round the corner, social scientists are running data on why people leave tech, looking for holes in the leaky pipeline, so to speak. (They later published this study.)

Downstairs, Gabriel Chaparro — who ran the center's SMASH math and science program for students of color at Stanford — shares the lesson he wants to drill into young minds.

"You're going to step into places where there's a line of people and none of them look like you. But you've earned your space. So get in that line, push them aside," he says. "You can't just look at that line and say I don't fit in there. Make your fit."

It's a very Silicon Valley way of being. It's how Uber CEO Travis Kalanick broke the yellow cab industry in city after city.

In some ways, Kapor Klein wants young people who grew up poor to channel Silicon Valley's sense of entitlement — the idea that it's OK to fail; that failure is necessary; and that one deserves support anyway. She herself doesn't come from money. She grew up on a U.S. Air Force base in Biloxi, Miss., and one of her earliest memories was seeing, at age 3, her 7-year-old brother bloodied, beaten for being a Jew. She knew then the world isn't fair.

The Uber row isn't her first in Silicon Valley. To some extent, she's used to it. She is rich (she won't disclose how rich) and travels in wealthy circles, where people have strong feelings about money. She remembers a billionaire who suggested she's spending too much on her do-gooder education programs. She recollects telling him, "Well, you probably write a check that's somewhere between five and 10 times that amount of money for private kindergarten for your child."

She's quick to point out, though, that she jabbed because she was asking him to donate. If there wasn't a specific ask, a concrete step she was advocating, she said she would hold back.

NPR did approach leading investors (as Kapor Klein suggested) to get their take on Uber, her letter, and what's the real problem. One was willing to go on the record.

"If you are a shareholder in a company and a stakeholder in a company, you would want to speak with one voice and you would want to work on the problem primarily," says Jason Calacanis. "To kind of blindside a company with a post like that means now the company not only has to solve the problem, they have to react to that position publicly."

Calacanis is an influential angel investor, and author of a new book on how to invest. While he respects Kapor Klein's work with the underprivileged (he's invited her to speak about it to his startups), he says that the way she spoke out created a "negative atmosphere" — a media circus.

And, Calacanis adds, it takes a hard-charging CEO to build the Uber empire. Soft questions around culture, an inclusive culture — those come later. "After you've won, or won a decent amount of market share or won the early fights, I think you have to shift gears a bit. And I think that's what Uber's going through."

Kapor Klein disagrees — and Uber's monumental meltdown is arguably proof she was right. But when I sit down with her in April, as the drama continues to unfold, she's become hesitant. Uber reached out to her for help, after her letter. Now, as I ask questions about it, she's being tight-lipped.

Asked if she is uncomfortable, she says she is, "because my goal now is to help Uber and any other company that really genuinely wants to change. I don't know what snippets you might use, how they might hear that, and whether that's going to hamper the efforts."

Kapor Klein wants the world to understand: Yes, she spoke out when others would not. But no, Uber isn't the only problem child in Silicon Valley. They just happened to get caught. This week she and her husband issued a statement to that effect, saying "the company deserves some room" to work on itself.

Copyright 2017 NPR. To see more, visit http://www.npr.org/.

ARI SHAPIRO, HOST:

With Uber in upheaval, investors are hoping the company will pull it together and continue to make them money. Now we're going to hear about one Uber investor who also decided to try and turn this crisis into a teachable moment. NPR's Aarti Shahani has her story.

AARTI SHAHANI, BYLINE: Let's rewind back to mid-March. Freada Kapor Klein has decided to write an open letter to Uber, which she published with her husband, after a young woman shared an explosive account of sexual harassment at Uber headquarters. Kapor Klein felt it was her duty to say what many knew - this is not a one-off. And it turns out her peers didn't like that.

FREADA KAPOR KLEIN: I could imagine that they wouldn't love the Uber letter. But then that they would decide that the next step they ought to go is go after our high-growth, hot startups and try to get them away from us.

SHAHANI: Kapor Klein is a venture capitalist, a VC. That means she makes money by betting on technology startups. She's learned that other VCs are trying to poach a startup she's backing. And to do it they're trash talking, basically saying she throws people under the bus.

KAPOR KLEIN: I mean, it's one thing to go pitch them. It's another to say, get away from Kapor. See? They're going to do this to you.

SHAHANI: This may be counterintuitive, but in Silicon Valley, the land that created tweeting, there is a code of silence among the rich. People are here to make money, not to agitate. Kapor Klein violated. But she won't back down. She tells me I should call a shortlist of very powerful VCs and demand their response on the record.

KAPOR KLEIN: Go to Sequoia. Go to Benchmark. Go to Kleiner. Go to Accel. Go to Andreessen. Go to Khosla.

SHAHANI: Back to that in a bit. We're in the Kapor Center, a four-story building in central Oakland, what's become the edge of Silicon Valley as tech expands. Kapor Klein goes in search of her husband, who's also her business partner. The second they meet she launches into her idea for my reporting.

KAPOR KLEIN: And I thought it would be great if she went and called up VCs and asked them what they thought about our Uber letter. What do you think?

SHAHANI: Mitch Kapor looks at his wife cross-eyed. He's a bit of a legend, by the way. In the 1980s he founded Lotus, the database maker. Some compare him to Steve Jobs and Bill Gates. Right now he happens to be meeting with the president of an influential bank who is right there, awkwardly staring at the floor. So she nudges that man - his name is Greg Becker - for his reaction.

GREG BECKER: People compete with any way they can, right? (Laughter) That's just...

KAPOR KLEIN: Yep.

BECKER: ...Unfortunately, that's human nature.

SHAHANI: Kapor Klein is not just poking to poke. She's playing a long game. Her life's work is to change the culture of Silicon Valley, a place she feels has gone backward in time. There are far fewer women in computer science today than in the 1980s. Blacks and Latinos are missing, too. She faults investors who hold on to a myth of meritocracy and have hokey sayings like...

KAPOR KLEIN: We don't care if you're orange or blue. The only color we care about is green.

SHAHANI: But if all Kapor Klein did was critique she'd be irrelevant here. This place values people who build things. And that is what she's doing. Her building feels like an alternate universe, one where tech somehow looks like the rest of America. On one floor there's the impact investment team.

ULILI ONOVAKPURI: Can you say valuation? (Laughter) Can you say IPO?

SHAHANI: Ulili Onovakpuri is teaching her baby niece industry speak and debating Kapor Klein on whether a startup that uses smartphones to watch patients take their medicine is worth the money. Onovakpuri was a teenager from a working-class family when she met the investor, who gave her a scholarship to Berkeley. Now the 32-year-old advises the health care portfolio.

ONOVAKPURI: Brrmmm-brrmmm (ph). Brrmmm-brrmmm.

SHAHANI: Around the corner, social scientists are running data on why people leave tech. They're looking for holes in the leaky pipeline, so to speak. Downstairs, Gabriel Chaparro, who's running a science and tech program for students of color at Stanford, shares a lesson he's drilling into the young minds.

GABRIEL CHAPARRO: You're going to step into places where there's a line of people and none of them look like you. But you have to take your space. You can't just look at that line and say, I don't fit in there. Make your fit.

SHAHANI: It's a very Silicon Valley way of being. It's how the Uber chief, Travis Kalanick, broke the yellow cab industry in city after city. I did approach leading investors, as Kapor Klein suggested, to get their take on Uber, her letter and what's the real problem. One was willing to go on the record.

JASON CALACANIS: To kind of blindside a company with a post like that means now the company not only has to solve the problem, they have to react to that position publicly.

SHAHANI: Jason Calacanis says Kapor Klein created a negative atmosphere, a media circus. And Calacanis says it takes a hard-charging CEO to build the Uber empire. Soft questions around culture and inclusive culture, that comes later.

CALACANIS: After you've won or, you know, won a decent amount of market share or won the early fights, I think you have to shift gears a bit. And I think that's what Uber's going through.

SHAHANI: Kapor Klein disagrees, and Uber's monumental breakdown is arguably proof she was right. But when I sit down with her in April as the drama continues to unfold, I notice she's hesitant. Uber reached out to her for help after the letter. Now she's being tightlipped. I ask her why.

KAPOR KLEIN: Well, just because my goal now is to help Uber and any other company that really, genuinely wants to change.

SHAHANI: Kapor Klein wants the world to understand, yes, she spoke out when others would not, but, no, Uber isn't the only problem child in Silicon Valley. They just happened to get caught. This week she and her husband issued a statement to that effect, saying the company deserves some room to work on itself. Aarti Shahani, NPR News, Oakland.